Arizona Independent Contractors: What you need to know

Whether a worker is an “employee” or an “independent contractor” is critical when it comes to such important issues as pension eligibility, workers' compensation coverage, wage and hour law, and many other matters. In some situations, federal law will govern, but the question is most often resolved by looking to state law, particularly in areas such as unemployment tax liability, workers' compensation, and state wage and hour requirements.

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In Arizona, employees covered by workers' compensation are defined as every person “in the service of any employer” who is legally or illegally permitted to work for hire except for a person whose employment is both casual and not in the usual course of the trade, business, or occupation of the employer (AZ Rev. Stat. Sec. 23-9011). Courts in Arizona have ruled that whether an individual is an employee or an independent contractor is governed by the “right to control” test, that is, whether the employer retains the right to supervise or control the method of reaching the result contracted (Ringling Bros. & Barnum & Bailey Combined Shows, Inc. v. Superior Court In and For Pima County, 140 Ariz. 38 (Ariz. App., 1983)). In making this determination, the totality of the facts and circumstances of each case must be examined. No one factor is in itself determinative, but among the relevant factors are:

• The extent of control which the employer may exercise over the details of the work;

• Whether or not the one employed is engaged in a distinct occupation or business;

• Whether the particular occupation is usually performed under the direction of the employer or by a specialist without supervision;